Talks between Athens and EU lenders resume after Greece's ruling Syriza party dismissed reform demands from the country's international creditors as ''blackmail.'' As Sonia Legg reports the crisis has entered a critical phase and that's being reflected in markets.
A government under pressure. Ahead of meetings in Brussels, Greece's international creditors gave Athens an ultimatum - come up with a credible reform plan or lenders will vote on their own proposals. Han Schelling is Austria's Finance Minister. (SOUNDBITE)(German) AUSTRIAN FINANCE MINISTER, HANS JOERG SCHELLING, SAYING: "It's amazing how carelessly the Greek government is dealing with its country... If this proposal is not acceptable to the finance ministers then we will have to look at the prepared alternatives." The ultimatum promoted no response from Greece before the morning deadline. Ruling party officials in Athens had earlier accused its lenders of "blackmail." It wasn't an ideal backdrop to a later leaders' summit in Brussels. Jeremy Stretch is European Head of Strategy at CIBC. (SOUNDBITE): Jeremy Stretch, European Head of Strategy, CIBC, saying (English): "Clearly the mood has soured significantly over the course of the last 24 - 36 hours - the optimism we had on Monday after the proposals were given a seemingly more positive reception by the various authorities has changed substantially and it does look like we are having an ongoing bout of megaphone diplomacy." European shares extended previous losses as investors cut their exposure to risk. Greece's benchmark ATG index fell more than 2 percent - with the country's banking sector down 4 percent. But still many Greeks support Tsipras. (SOUNDBITE)(Greek) ATHENS RESIDENT, CONSTANTINA DANOU, PENSIONER, SAYING: "He must not back down. He must not. When people have been suffering for 5 years now, a prime minister who got elected so recently, must not back down." (SOUNDBITE)(Greek) ATHENS RESIDENT, DIMITRIS 63, TRAVEL AGENT, SAYING: "He should drop it and walk away. When they say cut the money from pensioners, and put up VAT up to 23 percent, what is the point? We should leave the euro and may God help us" The clock is certainly ticking. Greece's current bailout runs out on Tuesday as an IMF debt payment becomes due. Any agreement reached needs to be approved by parliaments in Athens and Berlin before then. And now the ECB's emergency support for Greek banks is being questioned. The head of Germany's Bundesbank reportedly the latest to express concerns about the bank's commitment.